SMSF

Introducing the Chan & Naylor Enduring Family Superannuation Fund ™

There are more than 430,000 self-managed superannuation funds (SMSF) or DIY super funds operating in Australia.  The majority of these funds have been established for one reason only and that is to enable members of the fund to control the investment of their superannuation monies.  Many have become sick and tired of leaving their retirement dreams in the hands of faceless money managers.  Although this is a powerful driver, this single focus limits the strategic possibilities of the fund and misses the whole point of these powerful vehicles. 

In short these unique super funds have a very special place in Australia and for that matter the world if designed and used properly - they allow the aggregation and investment of a family's superannuation benefits as well as providing a pool of monies and assets to look after family members including children and grandchildren at the time of an accident, sickness, permanent disability, death, pre-retirement and retirement.  To make the most of a SMSF, turn it into an Enduring Family Superannuation Fund, in other words “turbo charge” it for maximum benefits.

The Enduring Family Superannuation Fund

The Chan & Naylor Enduring Family Super Fund is the same skeleton tax structure as a DIY super fund and a SMSF but the key focus is on the family and improved functionality to allow the trustees to avail themselves of all possible superannuation strategies.  Surprisingly of the 430,000 SMSFs in Australia that have the opportunity to have up to four members of a family in the fund, only 10% have chosen to do so.  20% of SMSFs have only one member with 70% having only two members.  This is a great loss of opportunity – can anyone imagine what it would be like to establish a family trust with only one or two beneficiaries.  No Chan & Naylor accountant or any accountant for that matter would recommend this limited course of action.  Why purposely restrict what you can do?

To see the difference between the Chan & Naylor Enduring Family Superannuation Fund and the DIY or SMSF fund consider some of the following Enduring Family Superannuation Fund strategies:

• An adult child member in the fund has an accident and spends six months off work.  The trustees of the Family Super Fund can begin to pay out salary continuance benefits to the incapacitated member to ensure that their salary and wages are kept to a level they were before the accident.

• The retiree members of the fund – aged over 60 use some of their superannuation benefits to fund a deposit on a property that is acquired with a loan from a bank.  However the younger members of the fund – their children aged 40 and 38 who are also members of the Enduring Family Super Fund pay off the loan with on-going salary sacrifice contributions made by their employer.  If the property is ultimately sold any capital gain is split between the family members relevant to their capital investments. While it is being rented the pre retirement members are reducing their tax liabilities on contributions to fund any negative gearing.   Any other properties (purchased earlier) producing a positive income flow can go to those in person stage at zero tax.

• Mum is the sole remaining parent member of the fund and has been diagnosed with dementia.  The adult child members are in the fund guiding her superannuation benefits towards the best in health and psychological care for their mother.

Enduring Family Super Fund FAQs

Let’s look as some important Frequently Asked Questions regarding a Family Super Fund.

1. I have a SMSF – can this be turned into a Family Super Fund or do I have to get some more documentation or a different trust deed?

Provided you are using a Chan & Naylor SMSF trust deed, which has in-built Family Superannuation Fund strategies and options, there is nothing preventing you and your family using your SMSF as a Family Superannuation Fund.  For those with another SMSF trust deed, it is a simple process to upgrade the rules of the fund to a Chan & Naylor Enduring Family Superannuation Fund trust deed.

2. I don’t want to bring my children into the fund and they take control when I get older.

This is a key benefit The Enduring Family Superannuation Fund. When a child, brother, sister or grandchild becomes a member of the fund they must become a trustee of the fund or director of the fund’s corporate trustee if the fund has one. For child members under the age of 18, one of their parents can act as a trustee or director on their behalf. Under the trust deed each trustee is given the same number of votes for each $1 sitting in the account balance of the member they represent.

3. I have three children how do I get all of them into the fund?

The limitation of these small superannuation structures is that only four members can reside in the fund at any one time. This means that the controllers of a Family Super Fund -generally the parents need to choose who is best to occupy the fund at that point in time. As with children living at home, at some stage a child's benefits and personal family circumstances may see them commencing their own Family Super Fund with their spouse and children -this may leave an opening in the parent's fund which may be filled by another child. Alternatively, for sizable funds it may be wise to consider two or more Family Super Funds to cover the immediate and possibly the extended family.

4. Is my super balance protected if I go bankrupt?

Normally, yes but the Enduring Family superannuation fund is set up in such a way that if you go bankrupt say after age 60, then the fund can pay you a lump sum which is protected while pension payments are not protected.